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Tool unveiled to identify 2-degree pathway investments

The 2° Investing Initiative (2°ii), together with Beyond Ratings, has launched a tool that supports investors, corporates and governments to align their investments to a two degree scenario.

This would restrict global warming to within two degrees above pre-industrial levels.

Simon Messenger, director at non-profit think tank 2°ii, said that the Climate Tech Compass tool “fills a critical gap in the market, helping users determine the technology roadmap and investments needed to achieve the 2°C goal”.

The aim of the project is to build sectoral technology pathways at country level that are in line with the Nationally Determined Contributions (NDCs) or 2°C scenario, a 2°ii spokesperson told Expert Investor.

NDCs are the national climate targets which become binding when a country ratifies the Paris Agreement.

As the tool outlines a technology roadmap for each industrial sector, the platform helps investors to select companies with an emissions pathway best aligned with a 2°C target, and assists governments with developing Paris-aligned NDCs.

Methodology

The methodology combines 2°ii’s high-resolution database of physical assets with research firm Beyond Ratings’ Climate Liabilities Assessment Integrated Methodology (Claim).

Beyond Ratings is a provider of environmental, social and governance (ESG) analytics and was acquired by the London Stock Exchange Group.

The Claim methodology provides country-level greenhouse gas emissions targets that are compliant with any climate scenario.

It determines optimal carbon budgets over time by country, taking into account marginal abatement cost curves (MACC), asset allocation and capex by sectors.

Once the sectoral target is derived, the technological mix per sector that enables it to reduce the emissions to the proposed level is estimated, the 2°ii spokesperson said.

2-degree technology boost

Sylvain Chateau, co-founder and COO of Beyond Ratings, said that the tool’s methodology “will play a critical role in channelling investments towards the technologies that are most needed in the key sectors to achieve the Paris Agreement goals”.

The model is currently available for the following eight sectors: power generation, cement, steel, agriculture, automotive, shipping, aviation and real estate.

The Climate Tech Compass also helps to assess stranded asset risks and helps actors to work together and achieve the Paris Agreement objectives.

Chateau highlighted: “With the IEA’s latest report highlighting that time is running out to shift towards a low-carbon world, the Compass comes at a critical moment.”

The beta version of the platform is available here and has been developed with support from EIT Climate-KIC, the EU’s main climate innovation initiative.

Elena Johansson

Senior Reporter

Part of the Bonhill Group.